Internet search giant Google Inc. GOOGL has announced the expansion of its high-speed Internet service through its fiber-optic network to Salt Lake City, Utah, along with a promise to make it available to residential and business customers throughout the city within just a few years.
Salt Lake City (SLC) is the eighth market area to receive its gigabit Internet and TV service after Atlanta, GA; Nashville, TN; and both Charlotte and Raleigh-Durham, NC, which received access to the service earlier this year. The fiber network is still in the design phase in these cities including SLC.
Google’s ultra-high speed service named Google Fiber already has a foothold in Kansas City, Texas, Austin and Provo, UT. Google launched its high speed Internet service named Google Fiber in Kansas City, MO in Sep 2012. It delivers Internet speeds of up to 1 gigabit per second.
Google charges $80 per month for gigabit Internet in Kansas City, Austin and Provo. The second plan comes at a price of $120.0 and offers TV service, a digital video recorder and a set-top box along with a tablet-computer remote control.
Google is also offering slower, free Internet with 5 Mbps speed for at least seven years for one time construction fee ranging between $30 and $300.
According to Global Industry Analysts, Inc. (GIA) reports of Mar 2014, the fiber optic components market is expected to reach $80.6 billion by 2018 globally. Fiber optic technology is seeing decent growth as the technology helps speed up data transfer. Advanced applications, PCs and network servers demand high speed that optical fiber cables can deliver.
Given its growth potential, Google is also exploring expansion options with other cities across the country including San Jose, CA; Portland, OR; Phoenix, AZ and San Antonio, TX.
Also, Google can bank on its speed to attract users. This can open another growth avenue outside search for the company as speed has been limiting the consumption of video and other data-heavy activities through the Internet. Also, it can help it to achieve its aim of providing faster and cheaper Internet service in the U.S.
Along with this announcement, Google also announced the appointment of Ruth Porat, Morgan Stanley's chief financial officer (CFO) since 2010, to the same position in the company.
Shares of Google were up 2.04% to $570.19 following the announcement. With the appointment of the new CFO and expansion of its service to a new city, we expect the company to slowly come back on track. Then again, only time will tell whether Google can make Fiber commercially viable or not and whether the new CFO can take the company to newer heights.
Google has a Zacks Rank #3 (Hold). Better-ranked stocks include Bazaarvoice, Inc. BV, Globant S.A. GLOB, and NetEase, Inc. NTES, all sporting a Zacks Rank #2 (Buy).
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